The U.S. Federal Trade Commission has weighed in on network neutrality, and has come down on the side of caution in a debate that goes to the heart of Internet technology.
A report issued Wednesday by the FTC's Internet Access Task Force recommended, in the words of Chair Deborah Platt Majoras, that "policymakers proceed with caution" in a dynamic industry that is "moving toward more -- not less -- competition."
In the "absence of significant market failure or demonstrated consumer harm," she added, lawmakers should be "hesitant" about new regulation.
Data prioritization and exclusive deals can work to the benefit of consumers, the report argued, noting that, at the very least, the net effects of legislation on prices, quality, and choices are not yet known.
FTC Decides To Punt
The struggle over network neutrality is, in part, a fight over competing business models. Such content providers as Google and Yahoo say they do not want to pay additional fees to allow their users priority access to their sites and services. Consumer groups say they do not want multitiered systems, where small organizations or businesses are at a disadvantage in reaching users because they cannot pay for priority network access.
But telephone and cable companies say efforts to limit their ability to charge for faster service also would limit their ability to upgrade the networks and so end up harming consumers and businesses.
While much of the heated discussion about network neutrality so far has been focused on the actions of the Federal Communications Commission, the FTC report noted that it and the Department of Justice, as well as the FCC, have jurisdiction over broadband Internet access.
But the FTC's entrance into the debate is not being well received by some network neutrality groups. "On fourth down with the future of the Internet on the line, the Federal Trade Commission decided to punt," noted Derek Turner of Free Press, an open media group.
"Despite the fervent wishes of the FTC staff," wrote Gigi Sohn of advocacy group Public Knowledge, "there is not a competitive market for high-speed Internet services."
The Save the Internet coalition added that the FTC report "includes no empirical research on competition in the local broadband market. It simply takes the incumbents at their word that the U.S. broadband marketplace is competitive -- even though most U.S. consumers have at best two choices for broadband at home."
Quality of Service
Matt Davis, an IDC analyst and one of the authors of IDC's just-released report on network neutrality, pointed out that IDC looked at the operational difficulties of enacting network neutrality legislation, and essentially agreed with the cautionary tone of the FTC report.
In the report, IDC predicted that network neutrality regulation will be adopted, in a "muted version" that will protect consumer choice and freedom but leave the business model to market forces. IDC also predicted that providers would be free to negotiate service relationships, and that network neutrality proponents would recognize that quality of service (QoS) is essential. As one example, the IDC report said that IP-based television services need a higher-level of QoS to guarantee reliable and sufficient bandwidth.
The IDC report suggested that proponents of network neutrality will eventually modify their position, participating in the "network prioritization environment," as they recognize that broadband network upgrades are essential and that network neutrality would have "a dampening effect" on upgrades. Providers will be left unregulated "as long as they provide network access in an evenhanded manner."
Real Reason To Fear
In a separate statement, FTC Commissioner Jon Leibowitz said he agreed with the FTC report, but also cautioned about caution. There is a "real reason to fear that, without additional protections, some broadband companies may have strong financial incentives to restrict access to content and applications," he wrote.
He cited one possible scenario. A broadband provider that has monopoly power in a given market might use that power to block or degrade applications or content that competes with those it provides itself. He also noted that a broadband provider could sell access to its customers that would also limit content and applications.
In either case, Leibowitz noted, "there is little chance" that antitrust actions could prevent these scenarios, and there might be "countervailing incentives" in the market to avoid doing so.
While the FTC's report reminds us that "regulation often has unintended side-effects," he wrote, it is also true that "doing nothing may have its costs as well."